The Rutland House Price Index: 135.78

I had the most interesting conversation the other day with a local Oakham accountant, who asked me about my articles on the local property market.  He was particularly interested with the graphs, facts and figures contained within them – so much so that he recommends his clients also read them.  However, one question that kept me on my toes was, “With so many House-Price-Indices, how do you know which one to use and how can you calculate what is exactly happening in Rutland?”

To start with, there are indeed a great number of these Indices, including the Land Registry, Office of National Stats, Halifax, Nationwide and LSL to name but a few. The issue occurs when these different house price indices give diverse pictures of the state of the UK housing market. Whilst some indices measure the average value of every property in the UK (sold or unsold), others measure the average ‘price-paid’ of houses that happen to be sold over a fixed time scale… confusing, isn’t it?

A lot of the variance between house price indices occurs because of the distinctive ways in which the numerous indices endeavour to beat these issues. You see, the biggest problem in creating a house-price-index when comparing and contrasting with most other indexes (e.g. inflation where the price a ubiquitous tin of beans can easily be measured over the months and years), is that every home is unique and as Rutlanders are only moving every 13.5 years, it appears the only thing that can be measured is the price of property sold in a given month.

By their very nature, all of the indices are only able to paint a picture of the whole of the UK or, at best, the regional housing market. As I have said many times in my articles, it is important to look to the medium term when considering house price inflation/deflation.

I can guarantee you in the coming few months, on a month-by-month basis, one or more of the indices will say property prices will have dropped.  Let me tell you, no property market indices are representative of the housing market in the short term.  Many indices have shown a drop around the Christmas and New Year months, even the boom years of 2001 to 2007 and 2013 to 2015.

So, back to the question, how do we work out what is happening in the local property market and can there be a 'Rutland House Price Index'?

To calculate what I consider is a fair and proper ‘House Price Index for Rutland', I initially needed to decide on a starting place for the index. I have chosen 2008 as far enough away, but still gives us a medium/long term view. Next, I split all the house sales into their types (Detached/Semi/House /Apartment) to give us an indication of what is actually selling by postcode district. So, for example, the following tables shows the LE15 postcode district (the sample shows 2008, 2016 and 2017.

 

	2008	2016	Proj 2017
Detached	49.6%	48.8%	45.8%
Semi Det	27.9%	18.3%	22.9%
Terraced	17.5%	26.2%	27.9%
Apartment	5.1%	6.8%	3.4%

Then I look at the actual numbers of properties sold in the LE15 postcode district. Below is the graph with the numbers for the years already mentioned. 

Next, I have looked at the prices paid for those types for every year since 2008, again in this example using the sample years of 2008, 2016 and 2017 for the LE15 postcode.

Finally, I amalgamated the same data points for the other postcode districts covered by Oakham and the surrounding villages, weighted it accordingly, to produce the Rutland House Price Index ... which after all that work, currently stands at for Q4 2017 at 135.78 (Q4 2008 = 100).

I hope you found that of interest and, over the coming months, I shall refer back to ‘Rutland House Price Index’ in future articles.

 

 

 

 

1 in 13 Stamford / SKDC rental properties will be illegal in 2018

As the winter months draw in and the temperature starts to drop, keeping one’s home warm is vital.

Yet, with gas, oil and electricity taking on average 4.4% of a typical Brit’s pay packet (and for those Brit’s with the lowest 10% of incomes, that rockets to an eye watering 9.7%), whether you are a tenant or homeowner, keeping your energy costs as low as possible is vital for the household budget and the environment as a whole.

For the last 10 years, every private rental property must have an Energy-Performance-Certificate (EPC) rating.  The property is given an energy rating, very similar to those on washing machines and fridges with the rainbow coloured graph, of between A to G (A being the most efficient and G the worst). New legislation comes in to force next spring (2018) for English and Welsh private landlords making it illegal to let a property that does not meet a certain energy rating.

 

After the 1^st of April next year, any new tenant moving into a private rented property or an existing tenant renewing their tenancy must have property with an energy performance rating of E or above on the property’s EPC and the new law will apply for all prevailing tenancies in the spring of 2020. After April 2018, if a landlord lets a property in the ‘F’ and ‘G’ ratings (i.e. those properties with the worst energy ratings) Trading Standards could fine the landlord up to £4,000.

Personally, I have grave apprehensions that many landlords may be totally unaware that their rental properties could fall below these new legal minimum requirements for energy efficiency benchmarks. Whilst some households may require substantial works to get their property from an F/G rating to an E rating or above, my experience is most properties may only need some minor work to lift them from illegal to legal. By planning and acting now, it will mitigate the need to find tradespeople in the spring when every other local landlord will be panicking and paying top dollar for work to comply.

Whilst there is money and effort involved in upgrading the energy efficiency of rental property, a property that is energy efficient will have greater appeal to tenants and other buy-to-let landlords/investors and this will enable you to obtain higher rents and sale price (if you come to sell your investment).

So, how many properties are there in the area that are F and G rated? Well quite a few in fact. Looking at the whole of the South Kesteven District Council area, of the 8,389 privately rented properties, there are:

535 rental properties in the F banding

138 rental properties in the G banding

That means just under 1 in 13 rental properties in the Stamford and surrounding area has an Energy Performance Certificate (EPC) rating of F or G. From April next year it will be illegal to rent out those homes rated F and G homes with a new tenancy.

Talking with the Energy Assessors that carry out our EPC’s, they tell me most of a building’s heat is lost through draughty windows/doors or poor insulation in the roof and walls. So why not look at your EPC and see what the assessor suggested to improve the efficiency of your property?

 

Contact us if you need some guidance on finding out the EPC rating or need a trustworthy contractor that can help you out.

 

David Crooke, Owner and MD

UPP Property Agents 01780 484 554

 

 

 

RIPE FOR RENO' - The 3 best properties on the Stamford & Rutland Property Market this week...

Each of these properties are in need of modernisation and all 3 have great potential. 

 

Renovated and refurbished to the right standard will improve the value either for a short-term flip or for long-term investment. 

 

But remember if you're not going to live in the property yourself, don't overspend or invest in the wrong areas. 

 

Ask me for advice if you are unsure on this, as I often see costly, unnecessary mistakes or indeed the wrong corners cut...

 

 

Property 1)

WHAT? 3 bedroom semi-detached for sale
WHERE? Queen's Road, Oakham
WHY? Chain Free, recently fitted boiler, on a large plot with good sized rooms



HOW MUCH?  Guide Price £160,000
FINANCIAL RETURN? Predicted rent approx. £650pcm *
MORE DETAILS?  Click here...
http://www.rightmove.co.uk/property-for-sale/property-51527613.html

Property 2)

WHAT? 3 bedroom house for sale
WHERE? Haddon Road, Stamford
WHY? Central location with off-road parking and garden




HOW MUCH?  £210,000
FINANCIAL RETURN? Predicted rent approx. £750pcm*
MORE DETAILS?  Click here...

http://www.rightmove.co.uk/property-for-sale/property-51463383.html

 

Property 3)

 

WHAT? 2 bedroom semi-detached cottage for sale
WHERE? East Street, Stamford
WHY? Characterful red brick cottage, good town centre location with front and rear gardens


HOW MUCH?  Guide Price £180,000
FINANCIAL RETURN? Predicted rent approx. £700pcm*
MORE DETAILS?  Click here...
http://www.rightmove.co.uk/property-for-sale/property-62496043.html

 

If you prefer modern / new build properties then please call me as I can suggest some alternatives for you to consider.  As a landlord myself, I know what makes a good property investment.

David Crooke, Owner and MD
UPP Property, Sales & Lettings 

Stamford 01572 725 825 / Oakham 01780 484 554
david@upp-property.co.uk

 

* The predicted rental valuations are based on properties in a renovated condition.

 

PART 2: Local Homeowners Are Only Moving Every 13.5 Years

In the credit crunch of 2008/9 the rate of home moving plunged to its lowest level ever. In 2009 the rate at which a typical house would change hands slumped to only once every 20.5 years. 

The biggest reason was a lack of confidence as property prices plunged after the onset of the financial crisis in 2008. 



However, since 2009, the rate of home moving has increased, meaning today:
The average period of time between home moves in Oakham is now 13.5 years.

This is an increase of 54% between the credit crunch fallout year of 2009 and today, but still it is a 21% drop in moves by homeowners, compared to 15 years ago.

 

In the UK in the 1960’s and 1970’s we were building on average 300,000 - 350,000 households a year. Comments in a recent study by ‘The Barker Review’, said that for the UK to keep up with housing demand we needed to build 240,000 households a year to stand still. In reality, we have only been building between 135,000 - 150,000 households a year. 

It must also be recognised that our ageing UK population is a less mobile one. Many of the older generation are stuck in property that is simply too big for their needs. The fact is that in Oakham and the Rutland area, more than 6 out of every 10 owned houses has 2 or more spare bedrooms.

So, as their children and grandchildren struggle to move up the housing ladder, with those young families bursting at the seams in homes too small for them (i.e. overcrowding), we have a severe case of under-occupation with the older generation having a profusion of spare bedrooms.

Regrettably, I cannot see how the rate of properties being sold will rise any time soon. Many commentators have suggested the government should give tax breaks to allow the older generation to downsize, yet in a recent White Paper on housing published just weeks before the General Election, there was no reference of any thoughtful and detailed policies to inspire or support them to do so.

There could be an opportunity for buy-to-let landlords to secure larger properties to rent out as the demand for them will surely grow over the coming years. Homeowners in the lower - middle Oakham market will find it a balanced sellers’ / buyers’ market, but will find it slightly more a buyers’ market in the upper price bands.

 

If you are considering selling your home or property investment, let me reassure those of you thinking about selling your property that in an uncertain market, IF promoted well from the beginning, your property can still generate genuine interest and achieve success.   We recently sold (stc) this fantastic 2 bedroom cottage in 1 WEEK with 6 OFFERS made.

Do call me, I am here to help.


David Crooke / email: david@upp-property.co.uk / 01572 725 825
Owner and MD

PART 1: Local Homeowners are only moving every 13.5 years

The average house price in Oakham is 12.6 times the average annual Oakham salary.

This is higher than the last peak of 2008 when the ratio was 9.8. 

 Some commentators have anticipated following the Brexit vote, UK property prices might drop like a stone. In reality, some have and some haven’t. 

The market for Oakham’s swankiest properties does appear fragile (although they are selling if they are realistically priced) and overall, Oakham property price growth has slowed, but the lower to middle Oakham property market appears to be quite strong.

Oakham residents are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the ‘noughties’. 

 

 

Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Oakham housing market following the 2016 Brexit vote has seen the number of property sales in Oakham and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared the ‘noughties’).

Today the property sales figures in the Oakham area since 2010/11, a new trend of number of property sales appears to have started. Interestingly, this has been mirrored nationally. The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016.  Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).

With meagre ‘real income’ growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).

Next week in part two of this topic, I will be discussing how these issues (and other issues) has meant the level of Oakham people moving home has slumped to once every 13.5 years.


David Crooke
Owner and MD

david@upp-property.co.uk

 

The 3 Best Property Deals on the Stamford & Rutland property market this week

Well, there aren't many property bargains out there but the following 3 properties do have attractive 4% yields - plus I mention a great property with a 5% yield, but, I'm sorry to say that you're all too late on that one, as we sold it in one week!

Not all properties appear on the open market, and many of our sales are done so discreetly.  We have a lot of landlords currently looking to adjust their portfolios in one way or another, and many would be interested in selling their properties through us discreetly.

To make sure you don't miss out, please make contact with us and register your interest - call 01780 484 554.

In the meantime, here are the 3 best property deals on the Stamford and Rutland property market for this week, irrespective of which agent it is being marketed by.

PROPERTY 1)

WHAT? 3 bed terraced house for sale

WHERE? Christchurch Close, Stamford

WHY? Modern and ideally located, situated within walking distance to the town centre.  This low maintenance, 3 bed property has allocated parking and will be highly sought after by tenants.

HOW MUCH?  GP £210,000.  Marketed by Knight Partnership.

FINANCIAL RETURN? Rent approx. £700pcm / Yield 4% / Annual Income: £8400

MORE DETAILS?  Click this link

http://www.rightmove.co.uk/property-for-sale/property-69595328.html

 
PROPERTY 2)

WHAT? 2 bed terraced house for sale

WHERE? Ribble Walk, Oakham

WHY? An ideal first time buy, these homes have a great layout with spacious, light filled rooms.

HOW MUCH? GP £150,000.  Marketed by Newton Fallowell.

FINANCIAL RETURN? Rent approx. £400pcm / Yield 4% / Annual Income: £4,800

MORE DETAILS?  Click this link...

http://www.rightmove.co.uk/property-for-sale/property-51218646.html

Property 3)



WHAT? 1 bed maisonette for sale
WHERE? Chepstow Court, Barleythorpe

WHY? Modern, in a sought after location and presented in immaculate order.

HOW MUCH?  £123,000.  Marketed by Newton Fallowell.
FINANCIAL RETURN? Rent approx. £425pcm / Yield 4.1% / Annual Income: £5,100
MORE DETAILS?  Click this link...
http://www.rightmove.co.uk/property-for-sale/property-50802441.html

 

And lastly, to reassure homeowners in an uncertain marketplace, a property marketed for sale well from the beginning can generate genuine interest and achieve success:-

We sold this fantastic 2 bedroom property in Caldecott in JUST 1 WEEK with 6 OFFERS made.  The property attracted a real mix of purchasers across the board from first time buyers, retirees looking to downsize and investor landlords. 

WHAT? 2 bed cottage

WHY? Sought after village location with good access to nearby towns, great condition, characterful and with parking.

HOW MUCH?  GP£119,000  SOLD stc

FINANCIAL RETURN? Rent approx. £500pcm / Yield 5% / Annual Income: £6,000

***Don't forget to register your interest for properties for sale that DO NOT MAKE IT ONTO THE OPEN MARKET: CALL US on 01780 484 554***

Best wishes

David

#happyhousehunting   #upp    #understandingpeopleandproperty

Stamford 01572 725 825 / Oakham 01780 484 554
david@upp-property.co.uk

 

Stamford House Prices Outstrip Wage Growth by 6.75% since 2007

I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years.  

 

The report said that in the midlands and the north, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the south, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of my blog know, I always like to find out what has actually happened locally. To talk of North and South is not specific enough for me.  Therefore, to start, I looked at what has happened to salaries locally since 2007.  Looking at the Office of National Statistics (ONS) data for South Kesteven District Council (SKDC), some interesting figures came out...
 

	SKDC	East Midlands	Nationally
2007	£22,948	£22,360	£23,920
2008	£24,898	£23,410	£24,960
2009	£23,967	£23,930	£25,506
2010	£25,548	£24,430	£26,088
2011	£24,851	£24,346	£26,010
2012	£25,631	£24,778	£26,432
2013	£26,624	£25,116	£26,931
2014	£25,490	£25,152	£27,097
2015	£24,716	£25,532	£27,508
2016	£24,352	£26,088	£28,132

 

 

Salaries in SKDC have risen by 6.12% since 2007 (although it’s been a bit of a rollercoaster ride to get there!).  That’s interesting in comparison to what’s happened with salaries regionally (an increase of 16.67%) and nationally, an increase of 17.61%.

 

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today.  Net property values in SKDC are 12.87% higher than they were in the middle of 2007 (not forgetting the dip in 2008 and 2009).  Therefore…

 

Property values in the Stamford area have increased at a higher rate than wages to the tune of 6.75% ... meaning, Stamford has bucked the regional trend

 

All of this is important, as the relationship between salaries and property values is the basis on how affordable property is to first time buyers (and second, third etc.).  It is also crucial for landlords as they need to be aware of this when making their buy-to-let plans for the future.  If more Stamfordians are buying, then demand for Stamford rental properties will drop (and vice versa).

As I have discussed in a few articles on my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Stamford and Rutland property market.  Now of course it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

 

On the face of it the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great.  However, look back another 10 years to 1997, and that tells a completely different story.  Nationally, the affordability of property more than halved between 1997 and today.  In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

 The issue of a lack of homeownership has its roots in the 1980’s and 1990’s.  Tenants find it hard to pay their rent whilst saving money for a deposit, meaning for many people home ownership isn't a realistic goal.  Earlier in the year, the Tories released proposals to combat the country’s 'broken' housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

 This is all great news for tenants and decent law-abiding landlords (and indirectly owner occupier homeowners).  Despite what has happened to salaries or property prices in the last 10-20 years, the demand for decent high-quality rental property keeps on growing.  

 If you want a chat about where the Stamford property market is going drop me note via email, like many other local homeowners and landlords are doing.

 

David Crooke, Owner and MD

UPP Property Agents, Sales & Lettings

 

david@upp-property.co.uk

Tel: 01780 484 554